-Figure 7-7 shows a firm's total variable cost for different daily output levels.In addition,the firm has total fixed cost of $50 per day.At an output level of 20 units,average variable cost is
A)$75.00,and average fixed cost is $2.50
B)$17.50,and average fixed cost is $50.00
C)$150.00,and average fixed cost is $2.50
D)$7.50,and average fixed cost is $50.00
E)$17.50,and average fixed cost is $2.50

Question

-Figure 7-7 shows a firm's total variable cost for different daily output levels.In addition,the firm has total fixed cost of $50 per day.At an output level of 20 units,average variable cost is
A)$75.00,and average fixed cost is $2.50 
B)$17.50,and average fixed cost is $50.00 
C)$150.00,and average fixed cost is $2.50 
D)$7.50,and average fixed cost is $50.00 
E)$17.50,and average fixed cost is $2.50

Quizplus · Accepted Answer

Average variable cost is calculated by dividing total variable cost by the quantity of output. If the average variable cost is $17.50 at 20 units, then the total variable cost is $350. The average fixed cost is calculated by dividing total fixed cost ($50) by the quantity of output (20), which equals $2.50.

-Figure 7-7 Shows a Firm's Total Variable Cost for Different